Sell Chimera Before The Earnings Announcement Tonight

By Parsimony Investment Research:We have hightlighted the risks of owning Chimera Investment Corp. (CIM) in previous articles, and we believe that investors should remain extremely cautious about the stock.In general, we are still bullish on mortgage real estate investment trusts ("mREITs"), particularly agency-focused mREITs like Annaly Capital Management (NLY) and American Capital Agency (AGNC). We think the current economic and interest rate picture is positive for mREITs. A weak economy is actually a good environment for mREITs, which benefit from low interest rates and a steep yield curve (see chart below). See our recent article "High Yield in a Slow-Growth World: Mortgage REITs" for more details.That said, Chimera is a non-agency focused mortgage REIT. As shown in the table below, over 70% of CIM's portfolio is allocated in non-agency RMBS.Whereas agency mortgages are guaranteed by government sponsored entities (implying limited credit risk), non-agency securities do not carry a similar impliedComplete Story »

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By Parsimony Investment Research:In general, we are still bullish on mortgage real estate investment trusts (“mREITs”), particularly agency-focused mREITs. We think the current economic and interest rate picture is positive for mREITs. A weak economy is actually a good environment for mREITs, which benefit from low interest rates and a steep yield curve.

By Parsimony Investment Research:Well, the Federal Reserve came through as promised yesterday as it said it will expand its holdings of long-term securities with open-ended purchases of $40 billion of mortgage debt a month in a third round of quantitative easing as it seeks to boost growth and reduce unemployment.

By Parsimony Investment Research:Investors should look at several key metrics when comparing and analyzing mortgage REITs, including size (market cap), leverage profile, composition of investments (i.e., Agency vs. Non-Agency and Fixed vs. Floating Rates), and most importantly tenure and strength of the management team. All of these metrics can significantly affect the risk profile of a particular REIT.

By Parsimony Investment Research:As if the second consecutive delayed filing wasn't enough to make Chimera Investment Corporation (CIM) investors a little squeamish, the company also recently announced that it has fired its auditor.

Zvi Bar submits:On Wednesday, Mad Money host and former fund manager Jim Cramer stated that he feels Chimera Investment Management (CIM) is not a good buy, is a sell and instead suggested that investors buy into Annaly Capital Management (NLY), now that it announced a